Additional Stimulus Boosts Chinese Tech Stocks
UU., They began operating in the first four months of 2019 amid hopes of a mutually beneficial trade agreement between the United States and China. Things unraveled in May when trade tensions erupted between the two economic superpowers resulting in the two countries imposing a series of new tariffs on each other.
China’s Finance Ministry said Monday that it planned to ease restrictions on how revenue from local government bonds for special purposes was spent and encourage banks to offer loans to projects financed by such debt. The people’s Bank of China hopes that economic stimulus will offset U.S. President Donald Trump’s threat of additional tariffs by boosting infrastructure investment. Shanghai Composite index of China (000001.SS) rose 2.6%, its biggest one-day gain since May 10, after the Ministry announced the latest move to boost the world’s second-largest economy.
Traders who want to expose themselves to China’s economy should monitor these three large-cap Chinese companies listed on U.S. exchanges. While these populations remain highly sensitive to ongoing trade negotiations, they will also benefit from China’s broad stimulus initiatives.
It operates through four business segments: Core Commerce, Cloud Computing, Digital Media and entertainment, and innovation initiatives. The e-commerce conglomerate reported fiscal fourth-quarter earnings per share (EPS) of fiscal 1.28, representing an increase in the bottom line of 40.7% from the previous year’s quarter. Revenue increased 51% year over year (YoY), driven by strength in the company’s China trade retail business, consolidation of Ele.me and Alibaba Cloud’s robust sales growth. Alibaba Group shares have a massive market capitalization of $ 423.46 billion and returned 16.62% year to Date (YTD) as of June 12, 2019, roughly in line with the Shanghai index’s 16.66% return over the same period.
A classic double bottom pattern that was formed in the fourth quarter of 2018 stands out in the Alibaba chart. The share price continued to rise for several months after breaking above the pattern’s cleavage in January, but fell in May as renewed trade tensions between the United States and China heated up. In early June, the price found support from a horizontal line connecting the previous price action over the past nine months. In addition, a recent crossing of the moving average convergence divergence line (MACD) above the signal line indicates continued bullish momentum. Those who take a trade should place a stop below the June 7 low at junio 152.21 and set a profit taking Order near the main resistance at $ 190.
Headquartered in Beijing, Baidu, Inc. (BIDU) provides internet search services in China and globally. Although China’s largest search engine saw its first-quarter earnings decline by 84.2% from a year ago, significant spending on traffic acquisition costs, content and new growth initiatives has led to mixed results in recent quarters. Revenue rose 8% during the period, driven by strength in education, retail and commercial services, a division that accounts for 82% of the company’s total revenue. Analysts have a 12-month average price target on the stock at Mar 209.15-81% above Tuesday’s closing price of Mar 115.37. Baidu shares have fallen 27.26% for the year, with below-average performance from the internet content and information industry by a whopping 40.62% as of June 12, 2019.
Baidu shareholders have suffered pain since July 2018, with a considerably lower trend for most of that period. Even as global stock markets posted solid gains in hopes of a trade deal between Washington and Beijing, the stock only managed to track sideways. Baidu shares continued lower for several weeks after disappointing quarterly earnings in mid-May, but have moved higher to start June. A recent bullish cross from the MACD confirms the bullish direction of the stock, suggesting that investors may have factored in the earnings disappointment. Traders who go a long time here should try to make a profit in a test of the profit gap high at $ 134.13 while protecting their disadvantage with a stop below the June 7 low at junio 109.03.
Open system. (JD) operates as an e-commerce company and retail infrastructure service provider in China. The e 40.83 billion e-tailer, which many compare to tech titan Amazon.com, Inc. (AMZN), has built its own nationwide compliance infrastructure and last mile delivery network that supports its various online businesses. JD.com it posted stellar first quarter results, recording EPS of 33 cents, while revenue came in at just over.18 billion, to deliver top and bottom year-on-year growth of 230% and 13%, respectively. The stock currently trades at $ 28 and has an impressive 30.24% YTD return as of June 12, 2019.
A cup and handle pattern has been formed on the chart of JD.com in the last 10 months, which indicates a continuation on the upside. The price found support on the lower trend line of the mango and the 200-day simple Moving Average (SMA) at the end of May and has since rebounded towards resistance at the $ 29 level. Traders should consider buying the shares at a convincing close above the top trend line of the handle. Set a profit target by measuring the distance of the cup and adding it to the break point of the handle. For example, the height of the Cup is about 12 points; therefore, add $ 12 to the break point at $ 29, which puts the profit target at $ 41. Reduce losses if the price closes below the pattern handle.